Question

Pass necessary Journal entry for the issue of 11% Debentures in the books of Arpita Ltd. in the following case:

Issued 2,000, 11% Debentures of ₹ 100 each at a premium of 10%, redeemable at a premium of 5%.

Answer 1

Journal Entry
Date	Particulars	L.F.	Debit (₹)	Credit (₹)
	Bank A/c   ...Dr.		2,20,000
	Loss on Issue of Debentures A/c   ...Dr.		10,000
	To 11% Debentures A/c			2,00,000
	To Securities Premium A/c			20,000
	To Premium on Redemption of Debentures A/c			10,000
	(Being 2,000, 11% Debentures of ₹ 100 each issued at 10% premium and redeemable at 5% premium)

Working Note:

Face Value = 2,000 × ₹ 100 = ₹ 2,00,000

Premium on Issue = ₹ 2,00,000 × 10% = ₹ 20,000

Premium on Redemption = ₹ 2,00,000 × 5% = ₹ 10,00

Bank Amount = ₹ 2,00,000 + ₹ 20,000 = ₹ 2,20,000